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Last week UK‘s Chancellor Philip Hammond delivered the Autumn Statement – country‘s economic forecast. In this post we list key messages and also review points that might be important to small business owners.
Recently there have been many rumours about VAT registration threshold being cut. However, the Autumn statement brought an end to the speculations with the good news of freezing the current threshold of £85,000 for the next 2 years.
The decision was met with relief by small business owners as it means that many companies will avoid paying VAT and will also be spared from MTD. We remind that from April, 2019 businesses with turnover above the VAT threshold will have to keep digital records of their accounts.
The Chancellor also had some good news for business owners who have been hit by rising business rates introduced in April 2017. The Chancellor announced that the rates will rise in line with the lower Consumer Prices Index (CPI) measure of inflation and not higher, more old-fashioned Retail Prices Index (RPI). The change will come into effect in April next year.
Also, the £1 000 business rates discount to pubs with a rateable value of less than £100K has been extended until March 2019.
The Chancellor announced he is ending the controversial ‘staircase‘ tax, which saw companies being allocated different bills for individual floors and workspaces linked by public areas. This led to tax bill increases for companies that occupy separate floors of a single building.
Hammond promised to change the law to ensure that where a business has been impacted by the Supreme Court ruling over ‘staircase‘ tax, it can have its original bill reinstated if it chooses, and backdated.
Probably the most welcomed news from this year‘s statement was the cancellation of stamp duty for first-time buyers purchasing properties. This will allow thousands of people to access the housing market and will increase house purchases.
The 0% rate conditions:
The Chancellor announced about the plans of extending the IR35 rules to the private sector „to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company”.
The new IR35 rules for the public sector were introduced this April. They shifted responsibility for evaluating the IR35 status of each contract to the organisation engaging the contractor, which would then be responsible for deducting PAYE.
Now, if recruitment agencies supplied contractors caught by IR35, they would be responsible for deducting tax. Extending these rules could mean many contractors will struggle to ever secure a fair IR35 assessment.
The Chancellor announced that the Research & Development tax relief rate will grow from 11% to 12%. The new rate will take effect from 1 January 2018.
Even though the news were positively met by many, some accountants pointed out that in reality it will only have a real positive effect on bigger businesses while small business owners won‘t see the difference.
Hammond also announced that an extra £8bn will be invested into the national productivity investment fund over the next six years.
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